Richard v. Glens Falls National Bank

• Decision Date: 03 March 2021
• Docket Number: 1:20-cv-00734 (BKS/DJS)
• Parties: DAPHNE RICHARD, individually, and on behalf of others similarly situated, Plaintiff, v. GLENS FALLS NATIONAL BANK and DOES 1 through 100, Defendants.
• Court: U.S. District Court — Northern District of New York

DAPHNE RICHARD, individually, and on behalf of others similarly situated, Plaintiff, v. GLENS FALLS NATIONAL BANK and DOES 1 through 100, Defendants.

1:20-cv-00734 (BKS/DJS)

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

March 3, 2021

Appearances:

For Plaintiff:

John C. Cherundolo

J. Patrick Lannon

Cherundolo Law Firm, PLLC

AXA Tower One 17^th Floor

100 Madison Street

Syracuse, NY 13202

Kevin P. Roddy

Wilentz Goldman & Spitzer PA

90 Woodbridge Center Drive, Suite 900

Woodbridge, NJ 07095

Taras Kick

The Kick Law Firm

815 Moraga Drive

Los Angeles, CA 90049

For Defendant Glens Falls National Bank:

Lukasz Sosnicki

Thompson Coburn LLP

2029 Century Park East, 19^th Floor

Los Angeles, CA 90067

Jonathan B. Fellows

Bond Schoeneck & King, PLLC

One Lincoln Center

Syracuse, NY 13202 Hon. Brenda K. Sannes, United States District Judge:

MEMORANDUM-DECISION AND ORDER

I.INTRODUCTION

PlaintiffDaphne Richard brings this putative class action against Defendant Glen Falls National Bank and various Doe Defendants¹ asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment/restitution, money had and received, and violations of New York General Business Law ("NYGBL")§ 349 arising out of Defendant's practices with respect to overdraft fees ("Overdraft Fees") and non-sufficient funds fees ("NSF Fees").(Dkt. No. 1).Presently before the Court is Defendant's motion to: (1) dismiss Plaintiff's Complaint pursuant to Fed. R. Civ. P. 12(b)(6), and (2) strike certain of the Complaint's allegations pursuant to Fed. R. Civ. P. 12(f)(collectively, the "Motion").(Dkt. No. 15).Plaintiff has filed an opposition to the Motion, (Dkt. No. 16), together with a request for judicial notice of certain documents, (Dkt. No. 17), and Defendant has replied, (Dkt. No. 18).For the reasons that follow, the Motion is granted in part and denied in part.

II.SUBJECT MATTER JURISDICTION

Before turning to the merits of Plaintiff's claim, the Court addresses the question of whether it has subject matter jurisdiction over this action.SeeDurant, Nichols, Houston, Hodgson & Cortese-Costa P.C. v. Dupont, 565 F.3d 56, 62(2d Cir.2009)("'It is a fundamental precept that federal courts are courts of limited jurisdiction' and lack the power to disregard such limits as have been imposed by the Constitution or Congress . . . If subject matter jurisdiction is lacking and no party has called the matter to the court's attention, the court has the duty todismiss the action sua sponte."(citations omitted)).In the Complaint, Plaintiff asserts that the Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332(d).(Dkt. No. 1, ¶ 12).²

Section 1332(d) grants federal courts jurisdiction over class actions that involve: "(1) 100 or more class members, (2) an aggregate amount in controversy of at least $5,000,000, exclusive of interest and costs, and (3) minimal diversity, i.e., where at least one plaintiff and one defendant are citizens of different states."Blockbuster, Inc. v. Galeno, 472 F.3d 53, 56(2d Cir.2006)(citing28 U.S.C. § 1332(d)(2), (5)(b), (6))."The Second Circuit has held that the traditional rule that the party asserting federal court jurisdiction bears the burden of establishing that the case is properly in federal court still applies when the party is asserting such jurisdiction under [28 U.S.C. § 1332(d)]."Anirudh v. CitiMortgage, Inc., 598 F. Supp. 2d 448, 450-51(S.D.N.Y.2009)(citingDiTolla v. Doral Dental IPA of N.Y., LLC, 469 F.3d 271, 275(2d Cir.2006)).

On January 20, 2021, this Court issued an Order to Show Cause in which it found that "[t]he Complaint's allegations are insufficient to show that either the minimal diversity or amount-in-controversy requirements of 28 U.S.C. § 1332(d) are met" in this action because it appeared that "both Plaintiff and Defendant Glens Falls National Bank are citizens of New York," and there were no allegations that any member of a proposed class is a citizen of a state other than New York.(Dkt. No. 23, at 4).The Court ordered Plaintiff to file a memorandum "showing cause why this action should not be dismissed for lack of subject matter jurisdiction."(Id.).In her responsive filing, (Dkt. No. 24), Plaintiff seeks leave to amend her complaint to add the following allegation:

This Court has subject matter jurisdiction over this action under the Class Action Fairness Act of 2005.Pursuant to 28 U.S.C. §§ 1332(d)(2) & (6), this Court has jurisdiction because (a) the proposed Class is comprised of at least 100 members; (b) at least one member of the proposed Class resides outside of the State of New York; and (3) the aggregate claims of the members of the proposed Class exceed $5 million, exclusive of interest and costs.

(Dkt.No. 24-2, at 3).In support of this allegation, Plaintiff submits, inter alia, a declaration from her attorney³ stating that he spoke with defense counsel who informed him that Defendant's customers include those with citizenship outside of New York, and that the Defendant did not intend to challenge this Court's jurisdiction over this matter.(Dkt.No. 24-1, at 2).Plaintiff's counsel also explained that, following his review of a Form 10K for the holding company for Defendant Glen Falls National Bank, and given his experience in other consumer class actions related to alleged improper Overdraft and NSF fees, he believes that "the amount in controversy in this action exceeds $5 million."(Id.).In its response to Plaintiff's filing, Defendant does not contest the new proposed allegations in paragraph 12 of the proposed amended complaint for the purposes of the Order to Show Cause and whether the proposed amended complaint sufficiently pleads subject matter jurisdiction.(Dkt. No. 25, at 1).

Considering Plaintiff's submission in response to the Order to Show Cause, the Court finds that, for purposes of the pleading stage, Plaintiff has met the minimal diversity requirement of 28 U.S.C. § 1332(d), i.e. that there is at least one class member who is a citizen of a State other than New York and was subjected to the alleged improper Overdraft or NSF Fees.Furthermore, at the pleading stage, Plaintiff's uncontested allegation that the aggregate amount in controversy exceeds $5,000,000 is sufficient to meet 28 U.S.C. § 1332(d)'s amount in controversy requirement.SeeDoe v. Trump Corp., 385 F. Supp. 3d 265, 283(S.D.N.Y.2019)(explaining for purposes of subject matter jurisdiction under 28 U.S.C. § 1332(d), "there is 'a rebuttable presumption that the face of the complaint is a good faith representation of the actual amount in controversy.'"(quotingColavito v. N.Y. Organ Donor Network, Inc., 438 F.3d 214, 221(2d Cir.2006))).Finally, the amended complaint's allegations give rise to a plausible inference that Plaintiff's proposed classes comprise at least 100 members.(Dkt.No. 24-2, at ¶ 65("While the exact number of Class Members is presently unknown to Plaintiff, and can only be determined through appropriate discovery, Plaintiff believe[s] that the Classes are likely to include thousands of members based on the fact that Glens Falls has approximately $2.5 billion in assets and operates approximately 30 branches in New York.")).

Therefore, the Court finds that it has subject matter jurisdiction over this action, and proceeds to evaluate Defendant's pending Motion on its merits.The Court will evaluate Defendant's Motion in light of Plaintiff's proposed amended complaint, (Dkt.No. 24-2), which is identical to her original complaint aside from the new subject-matter-jurisdiction-related allegation described above, and which the Court will hereinafter refer to as the "Complaint."SeePettaway v. Nat'l Recovery Sols., LLC, 955 F.3d 299, 303-04(2d Cir.2020)("[W]hen a plaintiff properly amends her complaint after a defendant has filed a motion to dismiss that is still pending, the district court has the option of either denying the pending motion as moot or evaluating the motion in light of the facts alleged in the amended complaint.").

III.FACTS⁴

Plaintiff is a resident of Glens Falls, New York and was a member of Defendant during all time periods relevant to the Complaint.(Dkt.No. 24-2, at ¶ 4).Defendant offers consumerbanking customers such as Plaintiff a checking account, which comes with features such as a debit card and the ability to write checks, withdraw money from ATMs, schedule Automated Clearing House ("ACH") transactions, and conduct other types of debit transactions.(Id.¶ 14).When Defendant determines that a customer's account does not have sufficient funds to complete a particular debit transaction, Defendant may assess one of two types of fees: an Overdraft Fee, which occurs when Defendant authorizes and pays the transaction despite the insufficient funds, or an NSF fee, which occurs when Defendant rejects and does not pay the transaction.(Id.¶ 15;Dkt.No. 15-3, at 4("Insufficient Funds"section describing these options);Dkt.No. 17-11(fee schedule listing Overdraft and NSF Fees);Dkt. No. 16, at 17 n.4).

There are three types of "balances" for a customer's checking account: the "balance," the "collected available balance," and the "artificial available balance."(Dkt.No. 24-2, at ¶ 23).⁵The "balance," sometimes called the "actual balance" or "ledger" balance, reflects the money actually in the customer's account, without deductions for holds on pending transactions or on deposits.(Id.).The "balance" is the official balance of the account that is used for reporting, regulatory and credit rating purposes.(Id.).The "collected available balance" is the "balance" less holds placed on certain deposits pursuant to Defendant's "Funds Availability Policy."(Id.¶ 24).The "artificial available balance" is the "collected available balance" less pending debit card transactions which have not yet posted (meaning that the money charged for the transaction is still in the customer's account).(Id.¶ 25).Plaint...